question
Economists use the word "capital" to mean
A)the tools, instruments, and other produced goods used to produce goods and services.
B)the workers that firms employ to produce goods and services.
C)the funds that firms use to buy and operate their businesses.
D)people's skills and talents.E)purchases in the market for stocks and bonds.
A)the tools, instruments, and other produced goods used to produce goods and services.
B)the workers that firms employ to produce goods and services.
C)the funds that firms use to buy and operate their businesses.
D)people's skills and talents.E)purchases in the market for stocks and bonds.
answer
A
question
The distinction between physical and financial capital is that
A)physical capital is equal to financial capital minus depreciation.
B)financial capital is used to purchase and operate physical capital.
C)the value of financial capital depends on the amount of available physical capital.
D)physical capital is equal to financial capital plus depreciation.
E)financial capital depreciates and physical capital does not.
A)physical capital is equal to financial capital minus depreciation.
B)financial capital is used to purchase and operate physical capital.
C)the value of financial capital depends on the amount of available physical capital.
D)physical capital is equal to financial capital plus depreciation.
E)financial capital depreciates and physical capital does not.
answer
B
question
An example of financial capital is
A)machines.
B)the talents of a highly paid movie star.
C)buildings.
D)bonds.
E)computers.
A)machines.
B)the talents of a highly paid movie star.
C)buildings.
D)bonds.
E)computers.
answer
D
question
________ increases the quantity of capital, and ________ decreases the quantity of capital.
A)Investment; saving
B)Gross investment; net investment
C)Net investment; gross investment
D)Depreciation; net investment
E)Investment; depreciation
A)Investment; saving
B)Gross investment; net investment
C)Net investment; gross investment
D)Depreciation; net investment
E)Investment; depreciation
answer
E
question
The Zonamo company produces waste disposal machines and sells them to militaries all over theworld. The company started last year with $10 million of capital on hand and invested $15 millionin new capital throughout the year. At the end of the year, the company's capital stock was $17million. Hence, for the year, depreciation equaled ________ and net investment equaled ________.
A)$8 million; $7 million
B)$5 million; $5 million
C)$8 million; $15 million
D)$25 million; $5 million
E)$7 million; $8 million
A)$8 million; $7 million
B)$5 million; $5 million
C)$8 million; $15 million
D)$25 million; $5 million
E)$7 million; $8 million
answer
A
question
During the year a country's income was $6.0 trillion and its consumption was $5.5 trillion. At the start of the year its wealth was $30.0 trillion. The country's wealth at the end of the year was
A)$30.5 trillion.
B)$30.0 trillion.
C)$36.0 trillion.
D)$6.0 trillion.
E)$35.5 trillion.
A)$30.5 trillion.
B)$30.0 trillion.
C)$36.0 trillion.
D)$6.0 trillion.
E)$35.5 trillion.
answer
A
question
To acquire financial capital, a firm can obtain a loan from
a bank.ii.issue stock.iii.issue bonds.
A)i only
B)ii only
C)iii only
D)i and iii
E)i, ii, and iii
a bank.ii.issue stock.iii.issue bonds.
A)i only
B)ii only
C)iii only
D)i and iii
E)i, ii, and iii
answer
E
question
A document that promises to pay specified sums of money on specified dates and is a debt to the issuer is called
A)net investment.
B)a stock.
C)gross investment.
D)a bond.
E)depreciation.
A)net investment.
B)a stock.
C)gross investment.
D)a bond.
E)depreciation.
answer
D
question
Which of the following are typically financed in the loan market?
i.a mortgage for a house iii.credit card balances iii.the purchase of a share of stock in a corporation.
A)i, ii and iii
B)i and iii
C)i and ii
D)ii and iii
E)i only
i.a mortgage for a house iii.credit card balances iii.the purchase of a share of stock in a corporation.
A)i, ii and iii
B)i and iii
C)i and ii
D)ii and iii
E)i only
answer
C
question
A stockholder ________ an owner of the firm, and a bondholder ________ an owner of the firm.
A)is not; is
B)is not; is not
C)might be; is not
D)is; is
E)is; is not
A)is not; is
B)is not; is not
C)might be; is not
D)is; is
E)is; is not
answer
E
question
One type of demander in the loanable funds market
A)lends funds to purchase financial capital.
B)wants physical capital in order to purchase financial capital.
C)wants funds to purchase financial capital.
D)lends funds to purchase physical capital.
E)wants funds to purchase physical capital.
A)lends funds to purchase financial capital.
B)wants physical capital in order to purchase financial capital.
C)wants funds to purchase financial capital.
D)lends funds to purchase physical capital.
E)wants funds to purchase physical capital.
answer
E
question
In the loanable funds market, demanders of funds are ________ and suppliers of funds are________.
A)firms and the government if it has a budget deficit; households and the government if it has a budget surplus
B)households and the government if it has a budget deficit; firms and the government if it has a budget surplus
C)firms and the government if it has a budget surplus; households and the government if it has a budget deficit
D)households and the government if it has a budget surplus; firms and the government if it has a budget deficit
E)households and firms; the government if it has a budget deficit
A)firms and the government if it has a budget deficit; households and the government if it has a budget surplus
B)households and the government if it has a budget deficit; firms and the government if it has a budget surplus
C)firms and the government if it has a budget surplus; households and the government if it has a budget deficit
D)households and the government if it has a budget surplus; firms and the government if it has a budget deficit
E)households and firms; the government if it has a budget deficit
answer
A
question
In the loanable funds market, which of the following is an example of investment demand?
A)Mary buying stocks for her retirement portfolio
B)George purchasing U.S. savings bonds for his son's college fund
C)Mark buying rare gold coins
D)Brian, owner of Bryan Games, purchasing computers to enhance the production of games
E)Scott purchasing a rookie-year baseball card for last year's World Series MVP
A)Mary buying stocks for her retirement portfolio
B)George purchasing U.S. savings bonds for his son's college fund
C)Mark buying rare gold coins
D)Brian, owner of Bryan Games, purchasing computers to enhance the production of games
E)Scott purchasing a rookie-year baseball card for last year's World Series MVP
answer
D
question
The opportunity cost of the financial resources used to finance the purchase of capital is
A)the quantity of investment demanded.
B)the real interest rate.
C)capital investment.
D)the price of the capital goods purchased.
E)the supply of investment.
A)the quantity of investment demanded.
B)the real interest rate.
C)capital investment.
D)the price of the capital goods purchased.
E)the supply of investment.
answer
B
question
Suppose the real interest rate increases from 4 percent to 6 percent. As a result
A)firms decrease the quantity demanded of loanable funds.
B)governments increase the supply of loanable funds.
C)firms increase their demand for loanable funds.
D)governments decrease the quantity supplied of loanable funds.
E)governments decrease their demand for loanable funds.
A)firms decrease the quantity demanded of loanable funds.
B)governments increase the supply of loanable funds.
C)firms increase their demand for loanable funds.
D)governments decrease the quantity supplied of loanable funds.
E)governments decrease their demand for loanable funds.
answer
A
question
As the economy enters a strong expansion, then firms' demand for loanable funds
A)decreases because expected profit decreases.
B)increases because expected profit increases.
C)increases because the real interest rate rises.
D)decreases because the nominal interest rate falls.
E)increases because the nominal interest rate rises.
A)decreases because expected profit decreases.
B)increases because expected profit increases.
C)increases because the real interest rate rises.
D)decreases because the nominal interest rate falls.
E)increases because the nominal interest rate rises.
answer
B
question
Ford Motor Corporation is considering purchasing new technology that will increase productivity by twenty percent. If Ford Motor Corporation decides to make this investment at the going real interest rate, then
A)the quantity of loanable funds demanded increases.
B)saving increases.
C)Ford's profits will decline.
D)the demand for loanable funds increases.
E)the supply of loanable funds increases.
A)the quantity of loanable funds demanded increases.
B)saving increases.
C)Ford's profits will decline.
D)the demand for loanable funds increases.
E)the supply of loanable funds increases.
answer
D
question
Which of the following decreases the demand for loanable funds and shifts the demand for loanable funds curve leftward?
A)The economy experiences a recession.
B)The real interest rate rises.
C)An economy experiences a rapid increase in population.
D)Wealth decreases.
E)Technology that increases productivity is introduced.
A)The economy experiences a recession.
B)The real interest rate rises.
C)An economy experiences a rapid increase in population.
D)Wealth decreases.
E)Technology that increases productivity is introduced.
answer
A
question
The supply of loanable funds is from
A)households and the government if it has a budget surplus.
B)households and the government if it has a budget deficit.
C)households and firms.
D)firms and the government if it has a budget surplus.
E)firms and the government if it has a budget deficit.
A)households and the government if it has a budget surplus.
B)households and the government if it has a budget deficit.
C)households and firms.
D)firms and the government if it has a budget surplus.
E)firms and the government if it has a budget deficit.
answer
A
question
Increasing savings and ________ consumption expenditure go hand in hand because they both________.
A)decreasing; are the result of an increase in nominal interest rates on the loanable funds market
B)increasing; are the result of an increase in nominal interest rates on the loanable funds market
C)decreasing; are the result of an increase in real interest rates on the loanable funds market
D)increasing; are the result of an increase in real interest rates on the loanable funds market
E)None of the above answers is correct.
A)decreasing; are the result of an increase in nominal interest rates on the loanable funds market
B)increasing; are the result of an increase in nominal interest rates on the loanable funds market
C)decreasing; are the result of an increase in real interest rates on the loanable funds market
D)increasing; are the result of an increase in real interest rates on the loanable funds market
E)None of the above answers is correct.
answer
C
question
An increase in the real interest rate
A)has no effect on the loanable funds.
B)increases current consumption.
C)decreases the quantity of loanable funds supplied.
D)shifts the supply of loanable funds curve rightward.
E)increases the quantity of loanable funds supplied.
A)has no effect on the loanable funds.
B)increases current consumption.
C)decreases the quantity of loanable funds supplied.
D)shifts the supply of loanable funds curve rightward.
E)increases the quantity of loanable funds supplied.
answer
E
question
As the economy enters an expansion so that people's expected future incomes rise, there will be
A)a decrease in the nominal interest rate.
B)a leftward shift in the supply of loanable funds curve.
C)an increase in the supply of loanable funds.
D)a leftward shift in the demand for loanable funds curve.
E)None of the above answers is correct.
A)a decrease in the nominal interest rate.
B)a leftward shift in the supply of loanable funds curve.
C)an increase in the supply of loanable funds.
D)a leftward shift in the demand for loanable funds curve.
E)None of the above answers is correct.
answer
C
question
If the real interest rate rises, then the
A)quantity of saving increases and there is a movement up along the supply of loanable funds curve.
B)demand for investment decreases and the demand for loanable funds curve shifts leftward.
C)supply of saving decreases and the supply of loanable funds curve shifts leftward.
D)supply of saving increases and the supply of loanable funds curve shifts rightward.
E)quantity of saving decreases and there is a movement down along the supply of loanable funds curve.
A)quantity of saving increases and there is a movement up along the supply of loanable funds curve.
B)demand for investment decreases and the demand for loanable funds curve shifts leftward.
C)supply of saving decreases and the supply of loanable funds curve shifts leftward.
D)supply of saving increases and the supply of loanable funds curve shifts rightward.
E)quantity of saving decreases and there is a movement down along the supply of loanable funds curve.
answer
A
question
When the real interest rate ________ the equilibrium real interest rate, there is a ________ of loanable funds and the real interest rate ________.
A)is less than; shortage; falls
B)exceeds; surplus; rises
C)is less than; surplus; rises
D)exceeds; shortage; rises
E)is less than; shortage; rises
A)is less than; shortage; falls
B)exceeds; surplus; rises
C)is less than; surplus; rises
D)exceeds; shortage; rises
E)is less than; shortage; rises
answer
E
question
The figure above shows the loanable funds market. The equilibrium real interest rate is ________percent, and the equilibrium quantity of loanable funds is ________.
A)4; $1.4 trillion
B)8; $1.8 trillion
C)4; $1.8 trillion
D)8; $1.4 trillion
E)6; $1.6 trillion
A)4; $1.4 trillion
B)8; $1.8 trillion
C)4; $1.8 trillion
D)8; $1.4 trillion
E)6; $1.6 trillion
answer
E
question
The figure above shows the loanable funds market. At an interest rate of
A)6 percent, the quantity demanded of loanable funds equals $14 trillion.
B)8 percent, the quantity demanded of loanable funds exceeds the quantity supplied.
C)4 percent, the quantity supplied of loanable funds equals $18 trillion.
D)8 percent, there is a surplus of loanable funds.
E)4 percent, there is a surplus of loanable funds.
A)6 percent, the quantity demanded of loanable funds equals $14 trillion.
B)8 percent, the quantity demanded of loanable funds exceeds the quantity supplied.
C)4 percent, the quantity supplied of loanable funds equals $18 trillion.
D)8 percent, there is a surplus of loanable funds.
E)4 percent, there is a surplus of loanable funds.
answer
D
question
In the figure above, the shift in the supply of loanable funds curve from SLF1 to SLF2 could be the result of
A)an increase in expected rate of profit.
B)an increase in the real interest rate.
C)a decrease in default risk.
D)an increase in expected future income.
E)a decrease in disposable income.
A)an increase in expected rate of profit.
B)an increase in the real interest rate.
C)a decrease in default risk.
D)an increase in expected future income.
E)a decrease in disposable income.
answer
C
question
If a government has a budget deficit, it must
A)borrow in the loanable funds market.
B)increase taxes.
C)decrease its expenditures.
D)decrease taxes.
E)lower the real interest rate.
A)borrow in the loanable funds market.
B)increase taxes.
C)decrease its expenditures.
D)decrease taxes.
E)lower the real interest rate.
answer
A
question
Government saving is equal to
A)the quantity of investment demanded.
B)net taxes minus government expenditures.
C)private savings minus government expenditures.
D)net taxes.
E)net taxes plus government expenditures.
A)the quantity of investment demanded.
B)net taxes minus government expenditures.
C)private savings minus government expenditures.
D)net taxes.
E)net taxes plus government expenditures.
answer
B
question
The crowding-out effect is the tendency for
A)lower private saving to increase the budget deficit.
B)higher government budget deficits to decrease investment.
C)lower private saving to decrease investment.
D)higher private savings to decrease government budget surpluses.
E)higher government budget deficits to increase total savings.
A)lower private saving to increase the budget deficit.
B)higher government budget deficits to decrease investment.
C)lower private saving to decrease investment.
D)higher private savings to decrease government budget surpluses.
E)higher government budget deficits to increase total savings.
answer
B
question
In the figure above, the DLF curve is the demand for loanable funds curve and the PDLF curve is the private demand for loanable funds curve. If there is no Ricardo-Barro effect, the figure shows a situation in which the government has a budget
A)surplus of $0.5 trillion.
B)deficit of $0.5 trillion.
C)deficit of $1.5 trillion.
D)deficit of $1 trillion.
E)surplus of $1 trillion.
A)surplus of $0.5 trillion.
B)deficit of $0.5 trillion.
C)deficit of $1.5 trillion.
D)deficit of $1 trillion.
E)surplus of $1 trillion.
answer
D
question
In the figure above, the DLF curve is the demand for loanable funds curve and the PDLF curve is the private demand for loanable funds curve. If there is no Ricardo-Barro effect, the figure shows the situation in which the government has a ________ so that the equilibrium real interest rate is________ and the equilibrium quantity of investment is ________.
A)budget deficit; 4 percent; $1 trillion
B)budget surplus; 4 percent; $1 trillion
C)balanced budget; 6 percent; $1.5 trillion
D)budget deficit; 6 percent; $1.5 trillion
E)budget surplus; 6 percent; $1.5 trillion
A)budget deficit; 4 percent; $1 trillion
B)budget surplus; 4 percent; $1 trillion
C)balanced budget; 6 percent; $1.5 trillion
D)budget deficit; 6 percent; $1.5 trillion
E)budget surplus; 6 percent; $1.5 trillion
answer
D
question
The Ricardo-Barro effect says that a government budget deficit leads to
A)an increase in demand for loanable funds.
B)a lower real interest rate.
C)no change in the real interest rate.
D)a higher real interest rate.
E)an increase in the quantity of investment.
A)an increase in demand for loanable funds.
B)a lower real interest rate.
C)no change in the real interest rate.
D)a higher real interest rate.
E)an increase in the quantity of investment.
answer
C
question
The Ricardo-Barro effect is based on the idea that ________ when the government has a budget deficit.
A)people increase their private saving
B)people decrease their private saving
C)investment demand increases because expected future profits increase
D)investment demand decreases because of the higher real interest rate
E)people immediately increase their tax payments
A)people increase their private saving
B)people decrease their private saving
C)investment demand increases because expected future profits increase
D)investment demand decreases because of the higher real interest rate
E)people immediately increase their tax payments
answer
A
question
Evidence to support the Ricardo-Barro effect would show that
A)higher government budget deficits decrease investment.
B)government budget deficits have no effect on the real interest rate or investment.
C)government budget deficits increase household consumption.
D)higher government budget surpluses decrease investment.
E)higher government budget deficits raise the real interest rate.
A)higher government budget deficits decrease investment.
B)government budget deficits have no effect on the real interest rate or investment.
C)government budget deficits increase household consumption.
D)higher government budget surpluses decrease investment.
E)higher government budget deficits raise the real interest rate.
answer
B
question
If investment demand increases, the equilibrium real interest rate ________ and the equilibrium quantity of investment ________.
A)rises; increases
B)rises; decreases
C)falls; decreases
D)falls; increases
E)does not change; does not change
A)rises; increases
B)rises; decreases
C)falls; decreases
D)falls; increases
E)does not change; does not change
answer
A
question
If saving supply decreases, the equilibrium real interest rate ________ and the equilibrium quantity of investment ________.
A)rises; decreases
B)does not change; does not change
C)rises; increases
D)falls; increases
E)falls; decreases
A)rises; decreases
B)does not change; does not change
C)rises; increases
D)falls; increases
E)falls; decreases
answer
A
question
In the late 1990s, the U.S. federal government had a budget surplus. If there is no Ricardo-Barroeffect, these surpluses ________ the supply of loanable funds and ________ the real interest rate.
A)decreased; raised
B)did not change; did not change
C)increased; raised
D)increased; lowered
E)decreased; lowered
A)decreased; raised
B)did not change; did not change
C)increased; raised
D)increased; lowered
E)decreased; lowered
answer
D
question
In 2020, the U.S. federal government budget had a budget deficit. If there is no Ricardo-Barroeffect, this deficit ________ the demand for loanable funds and ________ the real interest rate.
A)did not change; did not change
B)increased; raised
C)decreased; lowered
D)increased; lowered
E)decreased; raised
A)did not change; did not change
B)increased; raised
C)decreased; lowered
D)increased; lowered
E)decreased; raised
answer
B
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
